Thursday, November 01, 2007

"The Greatest Story Never Told"

That's how economist Larry Kudlow describes the media coverage of the American economy. Instead of obsessing with the 5% or less of the population whose homes are truly at risk in the current mortgage crisis, Kudlow looks at the whole economy:

Real gross domestic product, the best summary report of the American economy, came in at a breathtaking 3.9 percent annual rate for the third quarter. In fact, following the 3.8 percent growth rate for the second quarter, the U.S. economy has posted its strongest quarterly growth in four years. The economy actually appears to be speeding up, following the relatively sluggish performance of the prior 18 months.

On top of this, the inflation rate is actually slowing down. The consumer spending deflator is reading 2.1 percent for the past year, compared to over 3 percent six quarters ago. The core inflation rate is down to 1.9 percent, below the Fed’s 2 percent target.